The Indian Railways quadrilateral linking the four metropolitan cities of Delhi, Mumbai, Chennai and Howrah, commonly known as the Golden Quadrilateral and its two diagonals (Delhi-Chennai and Mumbai-Howrah), adding up to a total route length of 10,122 km comprising of 16% of the route carried more than 52% of the passenger traffic and 58% of revenue earning freight traffic of IR. The existing trunk routes of Howrah-Delhi on the Eastern Corridor and Mumbai-Delhi on the Western Corridor were highly saturated, line capacity utilization varying between 115% to 150%. Railways lost the share in freight traffic from 83% in 1950-51 to 35% in 2011-12.

The rapid growth of Indian economy has created demand for additional capacity of rail freight transportation, and this is likely to grow further in the future. This burgeoning demand led to the conception of the dedicated freight corridors along the Eastern and Western Routes. Minister for Railways, made this historic announcement on the floor of the House in the Parliament while presenting the Railway Budget for 2005-06.

In April 2005, the Project was discussed at the Japan-India Summit Meeting. It was included in the declaration of co-operation signed between the Honble Prime Ministers of India and Japan for a feasibility study and possible funding of the dedicated rail freight corridors by Japanese Government. The feasibility study report was submitted to Ministry of Railways in October 2007.

In the meanwhile, Ministry of Railways initiated action to establish a Special Purpose Vehicle for construction, operation and maintenance of the dedicated freight corridors. This led to the establishment of "Dedicated Freight Corridor Corporation of India Limited (DFCC)", to undertake planning & development, mobilization of financial resources and construction, maintenance and operation of the dedicated freight corridors. DFCC was incorporated as a company under the Companies Act 1956 on 30th October 2006.